Planning Around Future Cash Flow

Asset–Liability Aligned Wealth Management

Time is a design variable.

In The Planning Problem, we describe the most important decision investors face: how to allocate capital between stocks and bonds. That decision determines not only expected return, but volatility, inflation exposure, and the range of possible long-term outcomes.

The core insight is that risk is inseparable from time horizon.
Over short horizons, volatility dominates outcomes and can overwhelm expected returns. Over long horizons, inflation becomes the greater danger, and growth assets play a critical role in preserving purchasing power. The appropriate balance between stocks and bonds cannot be determined without reference to time.

That framing solves an essential part of the planning problem—but it does not yet answer a second, equally important question:

How should capital be structured to meet specific future obligations as they arrive over time?

We answer that by assigning capital to time horizons and matching assets to the obligations they are intended to support, so cash is available when it is needed without forcing reactive decisions.

This is where asset–liability aligned wealth management begins.

Extending the Planning Problem

Most wealth management still begins with portfolios.

We believe that approach stops one step too early.

While The Planning Problem explains why long-term investors must accept certain risks to achieve real returns, people do not experience their financial lives as abstract probabilities. They experience them as future obligations: spending needs, taxes, life transitions, commitments to others, and periods of uncertainty that arrive on a schedule that markets do not control.

The challenge is not simply earning an adequate long-term return.
It is ensuring that capital is structured so those obligations can be met without forcing poor decisions when markets are least forgiving.

Asset–liability aligned wealth management is the framework we use to extend The Planning Problem from broad portfolio balance into real-world implementation. It treats the portfolio not as a single risk decision, but as a system designed to support a sequence of future needs across multiple time horizons.

How We Frame the Problem

Rather than starting with yield targets or income assumptions, we begin by mapping future spending.

This is the bridge into Assessing Your Needs. Priorities are translated into a time-sequenced view of essential and discretionary expenses, adjusted for inflation, taxes, and the reality that spending is uneven over a lifetime.

Time remains the governing variable.

Each future obligation carries a different tolerance for volatility, a different degree of flexibility, and a different consequence if capital is unavailable when needed. Some needs must be met on schedule regardless of market conditions. Others can adjust. Understanding those distinctions allows capital to be aligned with purpose rather than averages.

Once future obligations are defined, we work backward.

Assets are evaluated not by recent performance or headline yield, but by how reliably they can support specific needs at the time those needs arise. What matters is not whether an account produces income in isolation, but whether the overall structure can deliver cash deliberately, tax-aware, and without forcing reactive investment decisions.

Why This Differs From Traditional Advice

Traditional portfolio construction often treats stock/bond allocation, income generation, and risk management as separate problems to be solved within individual accounts.

An asset–liability framework reverses that logic.

The portfolio is treated as a coordinated system, where growth assets, defensive assets, and liquid reserves serve different roles across different time horizons. The question is no longer “How aggressive should this account be?” but “Which assets are responsible for which future obligations?”

This perspective reduces the temptation to chase yield, react to short-term volatility, or mistake short-term market behavior for long-term risk.

How This Connects to Portfolio Design

Portfolio design follows from this framework—it does not precede it.

The Planning Problem establishes why long-term capital must accept volatility to overcome inflation. Asset–liability alignment determines where and when that volatility is acceptable.

Once future obligations are understood, portfolios are structured to balance growth, stability, liquidity, and tax efficiency across time horizons and accounts. Asset allocation, diversification, and rebalancing decisions are made in service of the overall structure, not as standalone objectives.

Because time is explicitly embedded in the design, portfolios can remain disciplined during market stress and adaptive as life evolves, without requiring constant intervention.

An Ongoing Process

This is not a one-time calculation.

As time horizons shorten, new obligations emerge, and circumstances change, the structure is revisited and refined. The framework remains consistent, even as inputs evolve. This allows portfolios to adapt without losing coherence or purpose.

What This Means for Clients

For clients, this approach creates clarity.

Decisions are evaluated in context. Tradeoffs are explicit. Risk is understood in relation to time, not headlines. And uncertainty is addressed through structure rather than prediction.

This is not about optimizing for a single number.